Documents & Reports

Paraguay - Country Partnership Framework for the Period FY19-FY23 (English)

Abstract

This document lays out the rationale for, and principal elements of, the World Bank Group (WBG) Country Partnership Framework (CPF) for Paraguay for FY19 to FY23. The proposed CPF is aligned with the core priorities of the new Paraguayan Administration1...
See More +This document lays out the rationale for, and principal elements of, the World Bank Group (WBG) Country Partnership Framework (CPF) for Paraguay for FY19 to FY23. The proposed CPF is aligned with the core priorities of the new Paraguayan Administration1 within the framework of its Plan de Gobierno 2018-2023, ‘Paraguay de la Gente’ (PdG 2023). It is also rooted in the findings and recommendations of the recent WBG Systematic Country Diagnostic (SCD) for Paraguay, which contains an analysis of key constraints to inclusive and sustainable growth and poverty reduction and suggests ways to address them. The SCD’s in-depth analysis of Paraguay’s underlying challenges is expected to anchor the dialogue and engagement throughout the CPF implementation period. This CPF is planned to cover five years (FY19-FY23) to ensure alignment with Paraguay’s electoral and planning cycles. The central finding of the SCD is that Paraguay’s economic model of heavy reliance on its abundant natural resources and favorable demographics will need to shift in the medium-term, both to maintain the economy’s strong growth trajectory and to further reduce poverty and promote shared prosperity. The SCD shows that Paraguay’s growth rate of over 4.5 percent per year in the 2004-2017 period, remarkable for the Latin America and Caribbean Region (LAC), and the accompanying strong reduction in poverty, can be attributed to a stable and reliable macro-economic policy environment and openness to private sector initiative. However, growth has relied on the conversion of forested land to commercial agricultural production and on reaping a sizeable demographic dividend. In the medium-term, limitations of these factors in continuing to drive growth and living standard improvements will become increasingly apparent given the rapid depletion of the country’s forest resources and the increasing impact on its agriculture sector of climate change-related weather phenomena. The contribution to growth of the demographic dividend will also start declining, especially if adequate employment opportunities are scarce and the human capital of young people is not improved. Finally, building on several important recent improvements, the pace of institutional change would need to accelerate to improve governance and transparency and reduce the extremely high concentration of economic assets and incomes. Increasing formality, raising the quality of public services and fostering business development in nontraditional areas are core to Paraguay’s institutional development agenda.
See Less -